The basical macroeconomics indicators

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The basical macroeconimics indicators.

The level of Macroeconomics is concerned either on with the economy as a whole or with the basic subdivisions of aggregates - such as government, household and business sec-tors - which meke up the economy. An aggregate is a collection of the specific economics units which are treated as if they were one unit. Macroeconomics overviews all economy by generally outlining the mainest aggregates which construct the economy. That's why such words as total, general are always used in Macroeconomics. That is the part of eco-nomics concerned with the economy as a whole; with such major aggregates as house-holds, business and governmental sectors and with totals for the ec. So, tha basical Macro-economics indicators are: Gross National Product (GNP), Price level, Interest Reate and Employment.

GNP: It is generally agreed that the best available indicator of economy health is its annual output of goods and services, or so-called aggregate output. This is called GNP and is de-fined as the total market value of all final goods & services produced in ec in one year. The definition of the GNP is very explicit and merits comments. First, GNP measures the market value of annual output. Second, GNP is a monetary measure. To measure all output accurately we should count all goods and services only once. That is why GNP increasereaseludes only final goods and services and ignores transactions involving intermediate goods and services. By Final meant such goods and services that are purchased for final use and not to be sold in future (resale), or other processing or manufac-turing. Directly opposite goods and services are called intermediate. Intermediate goods and services are excluded from GNP cause it could involve double countintg. Alot of nonproduction transactions must be carefully excluded fron GNP: financial transaction (public transfer payments - to increasereaselude them to GNP would be to overstate this year's production; private transfer payments - simp-ly transfer of funds to one person to another; security transactions - buying or selling stocks in the stock market.) secondhand sales (Such sales either reflect no current production or they involve double counting.) Actually GNP can be determined either by adding up all that is spent to buy this year's total output or by summing up all the increasereaseomes derived from the production of this year's output. The formula GNP can be determined looks like this:

GNP = C + Ig + G + Xn

where C stands for personal consumption expenditures (expenditures by houselods on durable consumer goods: automobiles, houses, VCRs, and so on; nondurable consumer googs: milk, bread, beer, toothpaste, clothes, etc.; consumer expenditures for services of lawers, doctors, barbers), Ig means Gross Private Domestic Investment, G governmental purchases of goods and services, and Xn stands for Net Exports, is the amount by which foreign spending on American goods and services exceeds American spending on foreign goods and servi-ces. All these categories of expenditures shown above increasereaselude all possible types of spend-ing. Added together they reflect the year's GNP.

Measuring the price level.

The price level is stated as an index number. A price index measures the combened price of particular collections of goods & services, called a "marked basket".

Price index Price of market basket in a given year

in a given year = ——————————————————————— X 100%

Price of the same basket in the base year

The Federal government computes price indexes os several different collections (or market baskets) of goods and services. The best knonw of these indexes are Consumer Price Index (CPI) which measures the prices of a fixed market basket of some 300 consumer goods and services purchased by a typical urban consumer. The GNP price index or GNP deflator , however, is more useful than the CPI for measuring the overall price level. GNP deflator also increasereaseludes the prices of investment goods, goods and services purchased by government, and g & s wich enter into world trade.

This paragraph summary.

1. GNP is a basic measure of society's economic performance, is the market value of all final goods and services produced in a year. Intermediate goods, nonproduction transacti-ons and secondhand sales are excluded from calculating GNP.

2. By the expenditures approach GNP is determined by adding consumer purchases of goods and services, gross investment spending by businesses, goverment purchases of goods and services and net exports.